Beginning January 1, 2024, the Corporate Transparency Act (CTA) will require many U.S. companies to report detailed ownership information to the Financial Crimes Enforcement Network (FinCEN). The law aims to increase transparency and combat financial crime. This post focuses on the steps needed to comply and how to avoid penalties, based on a basic understanding of the purpose and key terms of the CTA covered in previous posts.
Should I report it?
Most small businesses, including LLCs and corporations, are required to file Beneficiary Ownership Information Reports (BOIRs) with FinCEN, unless they are subject to certain exemptions (large operating companies such as banks or insurance companies, or certain regulated businesses).
What are the steps to compliance?
- Check if your business is required to report: Review your business structure and activities against the CTA criteria to determine if reporting is required.
- Information gathering: Collect details about the company and its beneficial owners, including name, address, date of birth, and identification such as a driver’s license or passport.
- Register with FinCEN: If your business is subject to the CTA, the next step is to register with the Financial Crimes Enforcement Network (FinCEN). This includes creating an account on the FinCEN portal, which will be used for all future reporting.
- Submit your report: Submit your initial report through FinCEN’s online portal. Comply with applicable deadlines.
- Businesses that existed before 2024 must report by the end of 2024.
- New businesses established in 2024 must register within 90 days of incorporation.
- For businesses established on or after January 1, 2025, you must file within 30 days.
- Update as needed: Report any changes in beneficial ownership or company details within 30 days.
Today’s Corporate CTA
Corporations Today deciphers the complexities of corporate transparency laws to provide a critical service to help your business stay compliant and maintain good credit. We also provide fast, friendly, and reliable service for incorporation in every state, specializing in Limited Liability Corporations (LLCs), C-Corporations, and S-Corporations.
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Best Practices
Stay up to date
- Periodic review: Review beneficial ownership information at least once a year, or more frequently if there are significant changes to your business.
- Immediate updates: To avoid penalties, you must promptly update FinCEN with any changes in beneficial ownership or company details.
Ensuring accuracy of reporting
- Please double check your submission: Avoid complications and potential defaults by verifying the accuracy of all information before submitting it to FinCEN.
- Record keeping: Keep thorough records of all submissions and supporting documentation. This practice is essential for compliance and is also beneficial for internal audits and potential legal review.
What are the penalties for non-compliance?
Failure to comply with the CTA can result in significant penalties, including daily fines and criminal charges, so it is important to meet all reporting deadlines and maintain accurate records.
Resources and Support
FinCEN has provided a Small Entity Compliance Guide to help small businesses understand their obligations under the CTA. The guide includes easy-to-understand language, key questions, and interactive tools to support compliance. Resources such as FinCEN’s guide and updates can help small business owners manage this process more easily.
Today’s Corporate CTA
Corporations Today deciphers the complexities of corporate transparency laws to provide a critical service to help your business stay compliant and maintain good credit. We also provide fast, friendly, and reliable service for incorporation in every state, specializing in Limited Liability Corporations (LLCs), C-Corporations, and S-Corporations.
If you make a purchase, we receive a commission at no additional cost to you.
To finish
Understanding the Corporate Transparency Act is essential for small business owners to navigate the requirements effectively. Familiarizing yourself with your responsibilities under the law will help you stay compliant while focusing on your business’ core operations, thus minimizing the risk of legal complications.
Corporations Today offers valuable services to help you in this area: one-time compliance services for your initial submission of the Beneficial Ownership Information (BOI) report to FinCEN, and ongoing compliance management services to monitor changes requiring reporting and send notifications of important compliance and state filing deadlines. These services are designed to streamline your compliance process, so you can focus on growing your business without unnecessary stress.
Start your incorporation or compliance process today.
In the next post in our CTA series, we’ll look at the potential consequences for businesses that don’t adhere to CTA standards and discuss effective strategies for correcting mistakes.
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